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Alaska
Arizona
Illinois
Unisys Corp. v. Burke, No. 3AN‐97‐2685 (Alaska Super. Ct. June 25, 1998). Plan
administrator and trustee sued Alaska insurance commissioner and Alaska Life
and Health Insurance Guaranty Association seeking participant level coverage
for portions of plan which were invested in four ELIC group annuity contracts,
arguing that participants were beneficial owners’ of the ELIC contracts, and thus
satisfied the Act’s prerequisite for ownership in order to obtain coverage.
Plaintiffs also alleged the ELIC contracts represented allocated annuities
because they guaranteed annuity benefits to individuals. The Association
prevailed on summary judgment arguing alternatively a statute of limitation
defense, and that the ELIC contracts were unallocated annuity contacts for
which the contract holder failed to meet the prerequisite of being an Alaska
resident.
Arizona Life & Disability Ins. Guar. Fund v. Honeywell, Inc., 190 Ariz. 84, 945 P.2d
805 (1997). Although GICs were issued to trustees of employee retirement plan,
court found individual plan participants to be equitable owners of the GICs.
Accordingly, the GICs fell within the coverage provision for annuity contracts
issued to state residents, and the Arizona association was obligated to cover
losses to pension plan caused by GICs.
Illinois Life & Health Ins. Guar. Ass'n v. Boozell, 289 Ill. App. 3d 621, 682 N.E.2d
291 (1997). A pension trust that purchased GICs from an insurer that
subsequently became insolvent was not an Illinois resident at the time the
insolvency occurred and therefore was not entitled to coverage from that
state’s guaranty association.
Dynamic Systems, Inc. v. Boozell, No. 95‐CH‐10657 (Ill. App. Ct. May 27, 1997).
Virginia 401K plan sought coverage under Illinois law for three pension GICs
issued by Illinois insurer. The Illinois association having denied the claims, the
plan appealed to the Illinois Department of Insurance. The Director held that
the Illinois association was liable, but only as to plan participants residing in
Maryland, where the issuer was not licensed. In subsequent proceedings, the
Circuit Court determined that the GICs were unallocated annuity contracts and
were not covered by Illinois law. The court also upheld the Director’s denial of
coverage for plan participants residing in Virginia or another state where the
issuer was licensed.
Indiana
Bennett v. Indiana Life & Health Ins. Guar. Ass’n, 688 N.E.2d 171 (Ind. Ct. App.
1997). The trustee of a pension benefit plan holds the assets of the plan in trust
for the exclusive benefit of the plan participants, who are, in turn, the beneficial
or equitable owners of any contracts held in trust for their benefit. Resident
plan participants are residents to whom contractual obligations are owed under
Indiana guaranty association law. The term “life,” against which statutory
obligations and coverage limitations are measured, refers to the lives of resident
plan participants rather than the GIC contract holders who may be benefit plan
trustees.
Michigan Unisys Corp. v. Commissioner of Ins., 236 Mich. App. 686, 601 N.W.2d 155 (1999).
Retirement plan administrator and trustee filed suit against the insurance
commissioner and the guaranty association seeking participant level coverage
under certain group annuity contracts, asserting that their resident plan
participants were the covered owners, or beneficiaries, assignees or payees of
these annuity contracts. The guaranty association denied liability on the
grounds that the contracts were unallocated annuities as defined under the
statute and that the plan trustee, as contract holder, was not a state resident.
The court entered summary judgment for the association finding that the
contracts were unallocated annuities within the plain meaning of the statute.
The court summarily rejected the plaintiffs’ beneficial ownership argument, and